22 dec 07

• HMF
 Operations Management
versus (interface)
Production Management
• Production management was traditionally
associated with goods production.
• Operations management was created for
the management of production of services.
• Operations Management is now used for
both goods and services production.
Operations Function

Operations
• Marketing
• Finance and
Accounting
• Human
Resources
• Outside
Suppliers
 Manufacturing Systems
• Components of Manufacturing System
• Production Machines
• Material Handling System
• Computer Control System
• Human Resources
 Production Machines

• Manual Operations
– Speed of Operator
– Quality of Operator
– Operator Skill Requirements
• Semi-Automated Machine
– Operator Assist Machine Operation
– Limited Operator Skill Requirements
• Automated Machines
– Speed of Machine Operation
– Capability of Automated Process
– Expense of Materials Handling Systems
 Production Machines
• In virtually all modern manufacturing systems, most of
the actual processing or assembly work is
accomplished by machines or with the aid of tools
• Classification of production machines:
1. Manually operated machines are controlled or supervised by a
human worker
2. Semi-automated machines perform a portion of the work cycle
under some form of program control, and a worker tends the
machine the rest of the cycle
3. Fully automated machines operate for extended periods of time
with no human attention
 Manually Operated Machine

Manually operated machines are controlled or supervised by a human

worker. The machine provides the power for the operation and the
worker provides the control. The entire work cycle is operator controlled.
 Semi-Automated Machine

A semi-automated machine performs a portion

of the work cycle under some form of program
control, and a worker tends to the machine for
the remainder of the cycle. Typical worker tasks
include loading and unloading parts
 Fully-Automated Machine

Machine operates for extended periods (longer

than one work cycle) without worker attention
(periodic tending may be needed).
 Material Handling System
• In most manufacturing systems the process or
assemble discrete parts and products, the
following material handling functions must be
provided:
1. Loading work units at each station
2. Positioning work units at each station
3. Unloading work units at each station
4. Transporting work units between stations in multi-
station systems
5. Temporary storage of work units
 Work Transport Between
Stations
• Two general categories of work transport
in multi-station manufacturing systems:
1. Fixed routing (Assembly line)
• Work units always flow through the same
sequence of workstations
• Most production lines exemplify this category
2. Variable routing
• Work units are moved through a variety of
different station sequences
• Most job shops exemplify this category
(a) Fixed Routing and
(b) Variable Routing
 Computer Control System
• Typical computer functions in a manufacturing
system:
– Communicate instructions to workers (receive processing or
assembly instructions for the specific work unit)
– Download part programs to computer-controlled machines
– Control material handling system
– Schedule production
– Failure diagnosis when malfunctions occur and preventive
maintenance
– Safety monitoring (protect both the human worker and
equipment)
– Quality control (detect and reject defective work units produced
by the system)
– Operations management (manage overall operations)
 Classification of
Manufacturing Systems
• Factors that define and distinguish
manufacturing systems:
1. Types of operations performed
2. Number of workstations
3. System layout
4. Automation and manning level
5. Part or product variety
 Classification of
Manufacturing Systems
• Factors that define and distinguish
manufacturing systems:
1. Types of operations performed
2. Number of workstations
3. System layout
4. Automation and manning level
5. Part or product variety
Types of Operations Performed

• Processing operations on work units versus assembly

operations to combine individual parts into assembled entities
• Type(s) of materials processed
• Size and weight of work units
• Part or product complexity
– For assembled products, number of components per
product
– For individual parts, number of distinct operations to
complete processing
• Part geometry
– For machined parts, rotational vs. non-rotational
 Number of Workstations
• Convenient measure of the size of the system
– Let n = number of workstations
– Individual workstations can be identified by subscript
i, where i = 1, 2,...,n
• Affects performance factors such as workload capacity,
production rate, and reliability
– As n increases, this usually means greater workload
capacity and higher production rate
– There must be a synergistic effect that derives from n
multiple stations working together vs. n single stations
 System Layout

• Applies mainly to multi-station systems

• Fixed routing vs. variable routing
– In systems with fixed routing, workstations are
usually arranged linearly
– In systems with variable routing, a variety of
layouts are possible
• System layout is an important factor in
determining the most appropriate type of
material handling system
Automation and Manning Levels
• Level of workstation automation
– Manually operated
– Semi-automated
– Fully automated
• Manning level Mi = proportion of time worker is in
attendance at station i
– Mi = 1 means that one worker must be at the station
continuously
– Mi ≥ 1 indicates manual operations
– Mi < 1 usually denotes some form of automation
 Part or Product Variety:
Flexibility
“The degree to which the system is capable of dealing
with variations in the parts or products it produces”
• Three cases:
 Single-model case - all parts or products are
identical (sufficient demand/fixed automation)
 Batch-model case - different parts or products are
produced by the system, but they are produced in
batches because changeovers are required (hard
product variety)
 Mixed-model case - different parts or products are
produced by the system, but the system can handle
the differences without the need for time-consuming
changes in setup (soft product variety)
Services Operations
Management
A Mixture of Ideas
 Services vs Production OM
• Many services contain some aspects of
production
• All producers of goods have customers and so
provide a service
• The customer is present during the large parts of
most services
• In services, operations, marketing and HRM are
more obviously integrated.
• Many production ideas - e.g. inventory
management, JIT and MRP can be applied in a
simple way.
• Project planning, TQM, capacity planning,
workforce scheduling, etc applies to everything.
 The Service Package - 1
• Core services
– What the customer really wants
• Hotel - the provision of a bed for the night
• Facilitating services
– Services that are needed for the core service to take
place
• Hotel - reception service, room cleaning
– Those which facilitate the sale of the products they
support
• technical advice, kitchen
• Augmenting services
– Those, whilst not strictly necessary, enhance the core
services
• Hotel - bar, restaurant, gym
 The Service Package - 2
• A bundle of goods and services provided in
some environment
– Supporting facility
• the necessary physical resources
– (golf course, hospital)
– Facilitating goods
• Material bought or consumed by customer
– (medical supplies, car spares)
The Service Package – 2 ctd.

– Explicit services
• Benefits readily observable by the senses and consist
of the essential features of the service
– (absence of pain after being fixed by dentist, the
response time of the fire brigade)
– Implicit services
• Psychological benefits customer senses vaguely
– (status of degree from good university, privacy of
consultation)
 Service Process Matrix
(Schmenner)
Degree of Interaction /
customisation 
   
Low High

   
Degree of Labour Intensity

  Low ervice Factory ervice shop

     Airlines      Hospitals

     Trucking      Car repair

 
H ass service
Hotels
    
rofessional
igh service
     Retailing
     Doctors
     Schools
     Lawyers
Retail
 Labour intensity = labour Banking
cost /     

Accountants
capital cost     
 The Service Encounter (Schmenner)

• The intersection of three attributes of service

management:
– Service task (voice of customer)
• states why service exists
• what customer values about service
– Service standards
• define effective service - measurable
– Service delivery system
• specifies how service is delivered
• controls for cost, quality, customer satisfaction
 The Service Encounter (Fitzsimmons’s)

• The service encounter triad

– Customer - Contact personnel - Service organisation

• Each attempts to exert control over the

encounter
– Service organisation dominant (McDonalds)
– Contact personnel dominant (doctors)
– Customer dominant (self service petrol station)

Ideally there should be balance between

participants
 Improving the service encounter

Ways to improve productivity

– Substitution
• capital for labour
• cheap labour for expensive labour
• customer labour for service provider labour
– Waste removal
• methods improvement (e.g. in parcel delivery )
• quality improvement
• Business Process Re-engineering
• Modularity (many tasks per worker)
– Reducing variance and variety
• Standardisation
• Less interaction
 Training Contact Personnel
• not just about procedures: how to handle difficult
interactions between customers and contact personnel
– Unrealistic customer expectations
• Unreasonable demands
• Demands against policies
• Unacceptable treatment of employees
• Drunkenness
• Breaking societal norms
• Special needs
Training Contact Personnel ctd..

– Unexpected service failure

• Unavailable service
• Slow performance
• Unacceptable service

– Customer
• Expectation and attitudes
• Customer as co-producer
 High Contact Service Encounters (Lovelock)

• Recruiting the right people for the job

• Who does the hiring
• Who must be hired v what can be taught
• Training in elocution and voice control, eye contact,
smiling - theatrical analogy
• Emotional labour - expressing socially desired emotions
during service transactions
• Monitoring non-verbal cues
• Adjusting one’s behaviour in the context of social
conditions
 Designing Service Processes

• Blueprinting (Shostack) separate diagram

– a picture of the service system
– shows processes and decisions
– front stage and backstage
• Helpful for
– definition
– understanding of critical success factors
– failure points
– waiting
– discussion
Managing queues and waiting areas

• Queues are endemic

– Fast food outlet
– Doctors’ surgery
– Tele sales
– Orders in a factory
• Complex arrival patterns of customers
– Individual / Bulk
– Random / scheduled
– Vary with time of day /year
Managing queues and waiting areas ctd..

• Customer behaviour
– Baulking - not joining queue
– Reneging - leaving the queue
– Jockeying - switching queues
• Queue discipline - order of service
– FIFO, LIFO, Random, Priority
– Parallel or single queues

• Variable service times

Managing queues and waiting areas ctd..

• Problem - decide on
– number of service stations
– staffing schedule
– queue management
• to produce acceptable waiting
– ‘Acceptable’ queuing time is complex issue
• Two analytical approaches
– Simulation by computer
– Queuing theory
• very restrictive assumptions
• for very simple cases only
 Waiting time and how to manage it

1. Unoccupied time feels longer than waiting time

2. Pre-process waits feel longer than in-process waits
3. Anxiety makes waits seem longer
4. Uncertain waits are longer than known waits
5. Unexplained waits are longer than explained waits
6. Unfair waits are longer than equitable waits
7. The more valuable the service the longer the customer
will wait
Solo waits feel longer than group waits
 Measuring Service Quality
(PZB)
• Service quality ‘is the degree and
direction of discrepancy between
customers’ service perceptions and
expectations’
Ten Dimensions of Service Quality

1. Tangibles - appearance of physical facilities,

equipment, personnel
2. Reliability - ability to perform the promised
service dependably and accurately
3. Responsiveness - willingness to help customers,
provide prompt service
4. Competence - has required skills and knowledge
5. Courtesy - politeness, respect, consideration,
friendliness
Ten Dimensions of Service Quality ctd.

1. Credibility - trustworthiness, believability,

honesty
2. Security - freedom from danger, risk, doubt
3. Access - approachability, ease of contact
4. Communication - keeping the customer
informed, listening to them
5. Understanding the customer - making an effort
to know customers and their needs
Some dimensions interrelated.
Based on qualitative studies.
 Operationalising the Service
Quality Gap
• Expectations statements
– Physical facilities at banks should be visually
appealing
– Lecturers should be smartly dressed when
giving lectures 
• Perceptions statements
– The physical facilities at NatWest Bank
(Broomhill) are physically attractive
– Lecturers in the Management School are
smartly dressed when giving lectures
Each rated on a seven point (agree/disagree) scale
Weight perceptions by expectations to obtain ‘score’
Reduced set of Service Quality Dimensions

• Tangibles
• Reliability
• Responsiveness
• Assurance
– knowledge and courtesy of employees and
their ability to inspire trust and confidence
• Empathy
– caring, individualised attention the firm
provides for its customers